Zhi Tong Cai Jing·2025-09-08 02:01Core Insights - The reinsurance industry is increasingly cautious due to rising climate risks, with major reinsurers significantly reducing their exposure to catastrophic insurance losses by over 50% in the past five years [1][2] - The industry has established substantial buffers to manage potential losses, with large reinsurers now capable of handling approximately $300 billion in insurance losses equivalent to three "Katrina" scale hurricanes within a year [2] - Natural disaster-related insurance losses are projected to exceed $150 billion this year, significantly higher than the average over the past decade [2] Reinsurance Industry Trends - Reinsurers are prioritizing profitability over growth, particularly in the U.S. property and casualty insurance sector, and are rejecting business that does not meet strict risk-return standards [3] - A survey by Moody's indicates that 75% of respondents expect property reinsurance prices to decline, with some anticipating a decrease of up to 7.5% next year [3] - The frequency of extreme weather events has increased dramatically, from about 50 events annually in the 1970s to nearly 200 in the past decade, posing significant long-term challenges for the reinsurance industry [3] Risk Management Strategies - Reinsurers are raising the payout trigger points to mitigate exposure to secondary risks, which are harder to model and price [4] - The industry has allocated a total budget of $21 billion to address disaster losses by 2025, but only half of this budget has been utilized so far [4] - In contrast, primary insurers in the U.S. have already used 80% of their disaster loss budgets, largely due to the impact of California wildfires [4]